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Cost accountants irked by exemption to milk food cos

Richa Mishra

New Delhi , Jan. 10

EVEN as companies in the business of manufacturing chocolates, ice-creams and `desi ghee' would be a happy lot, the recent move of the Department of Company Affairs to exempt the producers from following cost accounting rules has not been well received in professionals circles.

Based on representations from industry associations, the department recently revised the applicability of Cost Accounting Record Rules in the case of companies engaged in the production, processing or manufacturing of milk food.

Reacting to this revision, a cost accounting professional told Business Line, "The major beneficiary of this will be the multinational companies. The purpose of a cost auditing is to reduce cost and ensure that the benefit is passed on to the consumer. Agreed that milk has different qualities and different products require varied quantity of milk, but this does not mean that such product categories need not attract applicability of cost accounting rules."

In fact, this way the companies can easily refrain from disclosing certain information to the Government, they pointed out. Further, it is understood that the Institute of Cost & Works Accountants plans to take up the matter at its next council meeting and after getting the views of its members make a representation to the Government.

"The Government had received representations that the intention of amending the Cost Accounting Records (Infant Milk Foods) Rules, 1974 and Cost Accounting Records (Milk Food) Rules, 1986 was to merge the two rules. The new rules (Cost Accounting Records (Milk Food) Rules, 2001) had substantially increased the coverage of products by modifying the definition of milk products and even products such as chocolates have been treated as a milk," official sources said.

Further, it was also felt that since no minimum percentage of milk input in a product has been defined to make it a milk product for the purposes of cost accounting record rules, even the mere presence of milk in the most minimal quantities might cover the product under the revised rules. Considering this, the Government has decided to revise the applicability of the proviso in such a manner that these rules will be applicable to the companies engaged in the production, processing or manufacture of infant milk food as defined in the rules of 1974, or milk food as defined under the erstwhile rule of 1986, sources stated.

As per the Cost Accounting Records (Milk Food) Rules, 1986 - the rules are applicable to every company engaged in production, processing or manufacturing of milk food as malted milk food, energy food or food drink under any brand name excepting those companies falling under the category of small-scale industrial units.

The amended rules in 2001 defined the term milk food for the cost accounting record purposes as any type of milk food including infant milk food such as milk powder, malted milk food, complementary or supplementary food of infants and children, energy food or food drink under any brand name, derivatives of milk such as ice-cream, chocolate and desi ghee under any brand name.

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